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In the first half of 2024, Dubai's rental prices increased by an average of 13.5%, with growth expected to reach 20% by year-end. This upward trend is anticipated to continue into 2025, with forecasts indicating an 18% rise in short-term rentals and a 13% increase for long-term rentals. The real estate market is poised for organic growth, driven by rising property values, new developments, and a projected 6.2% national GDP increase in 2025. Increased housing supply, expected to add 182,000 units by 2026, aims to meet rising demand. A growing expatriate population is also pushing rental costs upward.
In the first half of 2024, rental prices saw an average increase of 13.5%, with growth anticipated to reach around 20% by the year's end. This upward trend is expected to continue into 2025. Nina Novikova, Chief Business Development Officer at Colife Dubai."Our forecasts for 2025 predict an 18% increase in short-term rentals (up to 6 months) compared to 2024, with long-term rentals (6 months or more) expected to rise by around 13%. Our data shows that rental prices have increased by an average of 16% since the beginning of this year. Traditionally, there's a peak in prices during the high season and a drop in the low season (summer months)," Advertisement
The real estate market is predicted to experience organic growth, highlighted by rising property values, new tower developments, and an increase in transaction volumes across both sales and rentals. The UAE Central Bank projects national GDP growth of 6.2% in 2025, spurred by expansion in the real estate sector. However, luxury projects are expected to decrease as developers focus on affordable and mid-range properties.
The growth in rental prices is closely linked to increasing property values. Data from Bayut reveals a 41% rise in property prices in Dubai in the first half of 2024, accompanied by a growth in transaction volume, with over 43,000 real estate transactions completed in the city during this period.
It is anticipated that the housing supply will expand by approximately 182,000 units across 2025-2026, with a significant portion of properties pre-sold in 2022-2023 reaching completion. About 76,000 units are expected to be ready by 2025. As property prices climb, investors are acquiring more expensive assets and renting them out at higher rates, creating passive income opportunities. Demand for rentals remains strong among tenants seeking both short- and long-term leases.
One of the most effective ways to save on rent is through long-term leasing, as extended rental agreements generally offer lower monthly rates. A one-year lease can provide significant savings, particularly with lower prices available during the summer season.
For instance, a one-bedroom apartment in JLT through Colife costs AED 9,500 per month on a 12-month lease, whereas a 3-month rental of the same unit costs AED 10,700 per month.
Dubai continues to attract an increasing number of professionals from around the world, driving up rental prices. Drawn by career opportunities, competitive salaries, high quality of life, and a warm climate, Dubai's population continues to grow. According to the 2040 Urban Master Plan, the city's population is expected to reach 5.8 million. With more professionals relocating to the city, housing demand continues to increase alongside prices, suggesting that the trend of rising rental costs will likely persist into 2025.
In conclusion, Dubai's rental market is set for continued growth, driven by increasing property values, strong tenant demand, and a rising professional population. The expanding housing supply and focus on affordable properties are expected to meet some demand, yet rental prices will likely remain high. Longer leases offer tenants cost-saving opportunities, especially in peak seasons, amid expected sustained rental increases.
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